Home sales could crash 23% following a US default and put the housing market in a 'deep freeze,' Zillow economist says

• A Zillow economist warned home values could decline 5% in the event of a debt default.
• In that scenario, existing home sales could drop 23% relative to the no-default baseline.
• The US has never before defaulted, but the "X-date" could hit as soon as early June.

In the event that the US defaults, the housing market could see a sharp drop-off in home sales, according to a Thursday Zillow report.

In this scenario, Zillow senior economist Jeff Tucker projects 23% fewer sales of existing homes to a seasonally adjusted annualized rate of 3.3 million in September. 

And by the end of 2024, home values could be about 5% lower compared to a no-default baseline. Prices would still rise 1% from today to the end of 2024, down from the current forecast of 6.5% growth in that stretch.